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Revenue Models

Revenue Models. flightline.highline.edu/jward/MGMT240.w08/PPTs/Lesson%202b.revenue%20models.240.w08.ppt. Revenue Models. Revenue model of selling goods and services on the Web Based on mail order catalog revenue model that predates the Web Spiegel Mail order or catalog model

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Revenue Models

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  1. Revenue Models flightline.highline.edu/jward/MGMT240.w08/PPTs/Lesson%202b.revenue%20models.240.w08.ppt

  2. Revenue Models • Revenue model of selling goods and services on the Web • Based on mail order catalog revenue model that predates the Web Spiegel • Mail order or catalog model • Proven to be successful for wide variety of consumer items • Web catalog revenue model • Taking the catalog model to the Web

  3. Computers and Consumer Electronics • Apple, Dell, Gateway, and Sun Microsystems • Have had great success selling on the Web • Dell • Created value by designing entire business around offering high degree of configuration flexibility to its customers

  4. Books, Music, and Videos • Retailers using the Web catalog model to sell books, music, and videos • Among the most visible examples of electronic commerce • Jeff Bezos • Formed Amazon.com • Jason and Matthew Olim • Formed online music store they called Cdnow (purchased by Amazon in 2001) • Used the Web catalog revenue model

  5. Luxury Goods • People are still reluctant to buy through a Web site • Web sites of Vera Wang and Versace • Constructed to provide information to shoppers, not to generate revenue • Web site of Evian • Designed for a select, affluent group of customers

  6. Clothing Retailers • Lands’ End • Pioneered idea of online Web shopping assistance with its Lands’ End Live feature in 1999 • Personal shopper • Intelligent agent program that learns customer’s preferences and makes suggestions • Virtual model • Graphic image built from customer measurements

  7. Flowers and Gifts • 1-800-Flowers • Created online extension to its telephone order business • Chocolatier Godiva • Offers business gift plans on its site

  8. Digital Content Revenue Models • Firms that own intellectual property • Have embraced the Web as a new and highly efficient distribution mechanism • Lexis.com • Provides full-text search of court cases, laws, patent databases, and tax regulations • ProQuest • Sells digital copies of published documents

  9. Advertising-Supported Revenue Models • Broadcasters provide free programming to an audience along with advertising messages 11 ALIVE • Success of Web advertising hampered by • No consensus has emerged on how to measure and charge for site visitor views • Stickiness of a Web site: ability to keep visitors and attract repeat visitors • Very few Web sites have sufficient visitors to interest large advertisers

  10. Web Portals • Web directory • A listing of hyperlinks to Web Pages • Portal or Web portal • Site used as a launching point to enter the Web • Almost always includes a Web directory and search engine • Example: Yahoo, AOL, Altavista

  11. Advertising-Subscription Mixed Revenue Models • Subscribers • Pay a fee and accept some level of advertising • Typically subjected to much less advertising • Used by The New York Times and The Wall Street Journal

  12. Fee-for-Transaction Revenue Models • Businesses offer services and charge a fee based on number or size of transactions processed PayPal • Disintermediation • Removal of an intermediary from value chain • Reintermediation • Introduction of a new intermediary

  13. Fee-for-Service Revenue Models • Fee based on value of service provided • Services • Range from games and entertainment to financial advice • Online games • Growing number of sites include premium games in their offerings • Site visitors must pay to play these premium games

  14. Works Cited • J. Ward, Highline Community College, MGMT240 Electronic Commerce: The Second Wave, Fifth Annual Edition

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